This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Abstract:

This case discusses how Semco, a Brazilian company with a turnover of US$4 million in 1982, which was on the brink of collapse, transformed itself into a more than billion dollar company. The company's transformation was the result of its giving unfettered freedom to its employees to choose the work they wanted to do, where and when they wanted to do it, and, also determining how they got paid for it. The employees were even free to hire and fire their bosses. Semco survived the economic crisis that the Brazilian economy went through in the 1990s by, most importantly, taking the employees into its confidence. The company, as a whole, was run by the employees. The case also discusses the unique organizational structure that was adopted to empower the employees to use the freedom that was bestowed upon them.

It further discusses the checks and balances put in place to discourage the employees from abusing their freedom and to be as productive as possible. The case underscores the philosophy that if an employee is treated as a grown up, he/she will act as one, and, that giving complete autonomy to employees does not necessarily mean compromising on the performance front. The case asks whether a human resource and strategy model akin to Semco’s can be adopted by other organizations. This case is meant for MBA students as a part of the Human Resource Management/ Organizational Behavior curriculum. It can also be used in a Strategy and General Management curriculum.

Issues:

» Study the practices adopted at Semco and how they helped the company achieve superlative performance.
» Understand the issues and challenges in organizing people in a company.
» Compare and contrast Semco's organization with that of other better known organizational structures.
» Discuss the organizational structures that are conducive to achieving maximum employee productivity while simultaneously empowering them.
» Discuss the checks and balances that need to be put in place to make employees accountable for their contribution to the organization.
» Understand the virtuous cycle generated by the three principles of employee involvement, profit apportionment, and information dissemination - involving employees gives them a grip over their work, sharing profits motivates them to accomplish their tasks better, and information dissemination makes them aware of what delivers results and what does not.
» Discuss and debate whether the practices adopted at Semco can be replicated in other organizations.